Used car sales fall by 400,000 as traders feel supply squeeze
EVs buck trend as second-hand market shrinks by almost 20%
Used car sales fell by almost 20% in the second quarter of the year, with new car supply issues blamed for a drop in second-hand supply.
Electric cars continued to buck the trend, with sales of second-hand EVs jumping by 57% but the rest of the market struggled, dropping 18.8% compared to the same period last year.
Industry experts say the global parts shortage which has affected supplies of new cars and has helped strengthen used car prices is now having a knock-on effect on availability in the second-hand market.
The latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that sales in April, May and June were down almost half a million from in 2021 to 1,759,684 in 2022.
The market enjoyed a sharp upturn in business in 2021 as dealerships fully reopened but pressures on supply and on drivers’ spending appears to have stalled that rise. Sales are down more than 8% on the same period last year and are 13.5% lower than in pre-pandemic 2019.
The SMMT’s chief executive Mike Hawes said the drop was inevitable after the strong performance in 2021 and in the face of issues faced by the new car market.
He said: “It was inevitable that the squeeze on new car supply would filter through to the used market. Despite this, Britain’s used car buyers clearly have a growing appetite for the latest low and zero emission cars, and we need a thriving new car market to feed it. The next Prime Minister must create the conditions to drive consumer confidence, especially in EVs, to drive the fleet renewal necessary to meet our decarbonisation goals.
Like new car sales, sales of used EVs continued to grow but still represent just 1% of the second-hand market.
James Fairclough, CEO of used car marketplace AA Cars, said the latest figures suggested demand was cooling but could bounce back as motorists look to save money.
He commented: "It’s worth remembering that the disappointing headline figure had a lot to live up to - it’s a comparison with the strong sales recorded in the second quarter of 2021, when dealerships reopened after months of lockdown.”
He said new car supply issues had helped drive motorists to the second-hand market but that this surge was “fizzling out”, adding: “Though the supply problems in the new car market are finally starting to ease, another factor could boost the used market in the coming months - Britain’s rapidly slowing economy.
“While the darkening economic situation has dragged down consumer confidence and eroded some people’s willingness to buy big ticket items like cars, there will always be a sizable number of drivers who want, or need, to replace an ageing car.
“For them, the used market - which offers both great choice and better value than brand new cars - is a highly attractive option, and even more so now that more electric vehicles are appearing on the used market.”
Lisa Watson, director of sales at Close Brothers Motor Finance, said financial concerns were also leading o a slowdown in the market. She said: “Well-documented supply chain issues, such as the semiconductor shortage, have continued to push people towards the used car market. However, people holding on to their cars for longer has caused a slowdown in transactions in recent months.
“Despite supply pressures, there remains strong demand for used vehicles - consumers are turning to the used market in a bid to soften the blow of the cost-of-living crisis and avoid lead times on new cars, which in some cases are exceeding 12 months.”